Dallas, Texas – Neiman Marcus doubles the customer experience in the battle for the luxury buyer’s wallet.
Almost a year after emerging from Texas bankruptcy courts, the Neiman Marcus Group, which owns its eponymous department store brand as well as the Bergdorf Goodman department store, is investing $ 500 million in a growth strategy that includes direct selling technology and building a faster logistics network.
The investment comes at a time when many department stores are struggling. Consumers are increasingly shopping online and some retailers are grappling with high costs of operating giant stores as foot traffic has declined. Desirable brands such as Nike and Gucci have also reduced their presence at multi-brand retailers, making it more difficult to attract buyers.
The idea behind Neiman Marcus’ strategy is to invest as much as possible in its existing luxury clientele by providing benefits such as faster shipping, digital personal shopping and high-end retail spaces so that big spenders develop a long-term relationship with the brand.
âWe don’t want market share or have the most customers; we want to have the customers who have the greatest potential to spend with us, âsaid Geoffroy van Raemdonck, CEO of Neiman Marcus Group.
It’s not about market share or having the most customers; we want to have the customers who have the greatest potential to spend with us.
And by curating a tight assortment of classic luxury brands like Balenciaga and Chanel with emerging designers like Japanese streetwear label Mastermind and menswear brand Rhude, he believes new and younger customers will follow suit.
Neiman Marcus spends around $ 200 million on store renovations to build living rooms, cafes and alteration services. In a post-Covid world, the company is betting that in-store services and amenities will further foster customer loyalty.
“[This customer] loves the luxury of a relationship, someone who inspires them, provides them with a service, sets up a dressing room, âsaid van Raemdonck. âWhat we do know is that when you recruit a customer in the storeâ¦ you have someone who is able to migrate to high prices. ”
Neiman Marcus also sees digital personal shopping as the next frontier in luxury. During last year’s pandemic, it launched NM Connect, an app where sellers could sell directly to buyers, and the company built the back-end of the app on the heels of its success. In July, it acquired Stylyze, an AI startup whose machine learning now enables NM Connect to make product recommendations based on past consumer purchases and prioritize which customers sales reps should contact.
âFrankly, it’s not about having a perfectly correct look; it’s about finding the look that’s just enough thatâ¦ the customer will say, ‘it’s attractive, it’s interesting, you’ve piqued my interest, let’s start a dialogue,’ said van Raemdonck. âWe create that connection and that inspiration. ”
Neiman has also developed a consumer app called Stanley, which aggregates everyday looks and allows users to book personal shopping appointments. The intention with Stanley is to get shoppers to interact with the brand on a regular basis, van Raemdonck said, even if it’s just initially to mix and match outfits.
âIt’s about increasing that frequency and attracting passionate customers, younger customers, digital customers, and giving them a reason to engage,â he said.
Neiman Marcus filed for Chapter 11 in May 2020 and came out of Texas bankruptcy courts four months later, having rid himself of around $ 4 billion in debt. It closed several underperforming stores, including most of its non-price division, Last Call.
With the return of shoppers to stores after Covid, Neiman Marcus has seen his sales increase. Van Raemdonck said sales rose 6% from 2019 during the company’s fourth quarter, which ended in July. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in the fourth quarter reached around $ 100 million, more than double what the company earned in 2019, he said. E-commerce sales in fiscal 2021, which ended in July, reached $ 1.2 billion, Van Raemdonck added, with digital sales accounting for 35% of the company’s total revenue. business.
Nonetheless, Neiman Marcus faces competition to attract luxury shoppers, both from rival department stores such as Saks and from digital platforms such as Net-a-Porter, Farfetch and Mytheresa.
Van Raemdonck said Neiman Marcus has refreshed his product assortment. In June, the company hired Lisa Aiken, Fashion Director of Moda Operandi, as Fashion and Lifestyle Director, and she was tasked with tackling emerging brands. Neiman Marcus also offers luxury brands like Tom Ford, Jil Sander and Van Cleef & Arpels, which are selective with wholesale partners in general.
But as a multi-brand retailer, the department store business finds itself in a difficult industry. The ability to start a business online means more brands are directing shoppers to their own websites and stores, and some luxury brands are tightening up distribution to eliminate wholesalers like Neiman Marcus altogether.
A landing page for Gucci from Neiman Marcus’ website in 2019 touted the brand’s handbags, shoes, clothing and even children’s clothing owned by Kering. Today, the same page lists seven stores where Gucci products are available and links to sunglasses, jewelry and perfumes available online. Neiman Marcus told BoF that he “is currently working with Gucci to evolve our online approach and our new partnership model in a way that supports both of our strategies.” The company said that in categories such as shoes, Gucci is part of its group of top brands.
Van Raemdonck said the brand’s reputation in luxury would ultimately help it stand out.
“If you are looking for sneakers and you know that there are five brands that are trendy, they can try all five brands. [with us] instead of going to five different stores, âhe said.
Investing in the luxury shopper should pay off for Neiman Marcus, said ThomaÃ¯ Serdari, professor of fashion and luxury marketing at NYU.
âThey want to feel that they are part of their own niche community and that they are special,â Serdari said. “Luxury buyers want highly personalized style, product personalization and attention to detail.”
Its commitment to invest – and integrate – its retail and digital businesses will also set it apart from the competition, added Serdari. Department stores like Saks have split their e-commerce and retail businesses, and activist investors are pushing Macy’s to do the same, but Neiman Marcus takes the opposite approach by connecting its channels.
For us, there is connective tissue between stores and online.
âFor us, there is a connective tissue between stores and online,â said Bob Kupbens, digital director of the Neiman Marcus Group. âCustomers don’t see themselves as an online shopper, they don’t see themselves as an in-store shopper. They see themselves as a client of Neiman Marcus.
To truly excel in luxury services, buyers expect products to arrive instantly, which is why van Raemdonck added that Neiman Marcus has invested in his supply chain, including updating the technology in its distribution centers in Pennsylvania and Texas so that it can offer same-day or two-day delivery to customers.
“We think it’s really important, for retention, that when we say it’s going to be the next morning or the same day, that it gets there the same day,” van Raemdonck said. âThese capabilities and visibility will really help us. ”
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